The impact to be made by the “fiscal cliff” can be softened even if the Congress and the White House fails to reach an agreement by December 31, 2012. The one thing that’s not under the White House’s control is the reaction of the financial market. Many fear that their might be a panic sell triggered causing economic doldrums globally.
The unpredictable nature of the stock market may just come in as a savior in difficult times like this. Politically speaking, President Barack Obama’a re-win has now softened the approach of the Republicans. Negotiations are most likely to take place before December 31 averting the fiscal cliff.
With that being said, there’s still fear among the Obama supporters that stock market could still take a toll if the fiscal cliff sets off.
The supposed fiscal cliff may be a mix of tax raises and cuts but the change of policy would be in effect with time. However, the financial markets are responsive not only to emotions but also to research and promises. The cliff may just be averted for the time being but the change in policy is likely to take place sometime in next January or February.